It's been a good week for Sonae, SGPS, S.A. (ELI:SON) shareholders, because the company has just released its latest annual results, and the shares gained 8.9% to €0.78. The results were positive, with revenue coming in at €6.8b, beating analyst expectations by 3.4%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, Sonae SGPS' four analysts currently expect revenues in 2021 to be €6.79b, approximately in line with the last 12 months. Statutory earnings per share are predicted to leap 32% to €0.04. Yet prior to the latest earnings, the analysts had been anticipated revenues of €6.78b and earnings per share (EPS) of €0.08 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
The consensus price target held steady at €1.10, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Sonae SGPS, with the most bullish analyst valuing it at €1.40 and the most bearish at €0.72 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 0.6% by the end of 2021. This indicates a significant reduction from annual growth of 3.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Sonae SGPS is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Sonae SGPS going out to 2023, and you can see them free on our platform here.
It is also worth noting that we have found 4 warning signs for Sonae SGPS (1 can't be ignored!) that you need to take into consideration.
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